The New York City (NYC) Council has launched an investigation into the prediction market advertising practices of Coinbase, Kalshi, Polymarket, and Gemini as they relate to users in the city. This follows earlier reports of deceptive ads that Polymarket used to target U.S. users. The investigation also comes as the state of New York cracks down on these platforms over violations of its gambling laws.
NYC Council Probes Prediction Market Platforms Over Marketing Practices
In a press release, the NYC Council Speaker Julie Menin announced an investigation into Coinbase, Kalshi, Polymarket and Gemini. “The inquiry is focused on their marketing and advertising practices in the city, including potentially false, deceptive, or abusive marketing tactics, with particular concern for marketing directed towards young people,” the release read.
The Speaker has already notified these prediction market platforms of the probe and has requested information about their respective marketing practices that reach New Yorkers. This follows a WSJ investigation in June, which revealed that Polymarket had carried out deceptive marketing, which included fake winnings intended to lure users.
The NYC Council stated that it has been looking into allegations of predatory marketing practices from the industry for months. “Ultimately, the Council aims to determine whether additional consumer protection legislation, enforcement, public education campaigns, health measures, and funding are necessary to protect New York City consumers from abusive marketing,” it said.
It is worth noting that the state of New York has already sued Coinbase, Kalshi, and Gemini over claims that their prediction market platforms violate the state’s gambling laws. The lawsuit against Kalshi took a new turn recently as the CFTC ordered Kalshi to keep operating in the state despite the lawsuit.
Focus On Polymarket
The NYC Council signaled that the probe will largely focus on Polymarket. The Council stated that it will examine allegations that the prediction market platform used or allowed social media influencers to entice young adults to bet on event contracts through false and deceptive marketing.
“These reported tactics include undisclosed influencer marketing, videos depicting non-existent trades on websites designed to appear similar to Polymarket, fictitious depiction of profitable wagers that actually would have generated losses, and the promotion of insider trading,” the Council said.
It further mentioned that understanding whether such marketing practices are prevalent within the prediction market industry is key to determining what legislation, regulations, and programs they need to put in place. The NYC Council added that the fact that gambling laws do not regulate these top crypto prediction market platforms adds to the necessity and urgency of the inquiry.
States continue to crack down on these platforms, arguing that they operate as unlicensed sports betting platforms. The courts have in recent times signalled support for this argument, with key rulings against these platforms in states such as Wisconsin, New York, and Utah.
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